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Automotive Tariffs and the New Economy in USA

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    Dave said : " The Canadian market for American cars will really not disappear. "

    You said Canadian auto jobs will disappear. How will unemployed Canadians purchase cars?

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    Chet Ruminski Wrote:

    Dave said : " The Canadian market for American cars will really not disappear. "

    You said Canadian auto jobs will disappear. How will unemployed Canadians purchase cars?

    Not everyone works in the automotive industry.

    I will contend that those Canadians who lose their jobs directly and indirectly from such a move, there will be still be a lot of new cars being sold. I would say 50% of the usual sales volume after the immediate shakeout, then up to 75% when the economy readjusts to the new reality. "Ruination of the Canadian economy" is truly unlikely.

    Cars in Canada should get a longer shelf life. Auto parts recyclers should see an increase in business. There will be more professional mechanics and backyard mechanics.

    As mention in a previous post, the cost of cars in the USA will rise substantially after the tariffs as well. And a lot more than just the tariffs! USA automotive workers should not be surprised to see a 50% reduction in sales volume in the first couple years as well. But when the final shakeout settles, there will be more Americans working in car factories as the Canadian factories close down and move south.

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    Dave, You said : "USA automotive workers should not be surprised to see a 50% reduction in sales volume in the first couple years as well."

    That would be catastrophic (catastfophic)*. Is 50% a casual opinion or is there supporting data for that outcome?

    * Spell check is subjectively selective.

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    Chet Ruminski Wrote:

    Dave, You said : "USA automotive workers should not be surprised to see a 50% reduction in sales volume in the first couple years as well."

    That would be catastrophic (catastfophic)*. Is 50% a casual opinion or is there supporting data for that outcome?

    * Spell check is subjectively selective.

    Chet. Nope, the 50% is only my best guess------------for whatever. But there should be no doubt that there will be a significant retraction of the automotive industry if the tariffs are imposed. There will be fewer American workers on the assembly lines. It will take at least five years for the dust to settle and regain this loss---and see the advantage of teh American worker over the Canadian worker.
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    Dave Volek Wrote:
    Chet Ruminski Wrote:

    Dave, You said : "USA automotive workers should not be surprised to see a 50% reduction in sales volume in the first couple years as well."

    That would be catastrophic (catastfophic)*. Is 50% a casual opinion or is there supporting data for that outcome?

    * Spell check is subjectively selective.

    Chet. Nope, the 50% is only my best guess------------for whatever. But there should be no doubt that there will be a significant retraction of the automotive industry if the tariffs are imposed. There will be fewer American workers on the assembly lines. It will take at least five years for the dust to settle and regain this loss---and see the advantage of teh American worker over the Canadian worker.

    "It will take at least five years for the dust to settle and regain this loss-"

    And that is optimistic but but what a difference a day makes. Perez's speech this morning was the stirring of a giant. Today was first best news in a long time. Perez says the party now recognizes the top concerns are wages and health care.

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    GM to lay off some 14,000 workers. The exec in charge said that trump's tariffs have cost GM an extra $1B on steel purchases.
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    USA TODAY

    WASHINGTON – Toyota CEO Akio Toyoda defended the automaker’s role in the American economy as the Trump administration continues to consider labeling imported vehicles as a national security threat.

    “I just don’t know why they call it a national security threat. That really makes me feel sad,” Toyoda said through an interpreter at the Economic Club of Washington, D.C. “I hope that this kind of conversation can go away.” The Japanese automaker is concerned about the possibility of increased tariffs on imported vehicles, which may be the Trump administration’s next step after the national-security threat decision.That Toyoda himself came to Washington to discuss the automaker’s commitment to America illustrates the depth of the company’s concern. Toyoda makes few high profile public appearances in the U.S. aside from the annual Detroit auto show. Since Trump began attacking imports after taking office, Toyota has taken steps to emphasize its U.S. investments. The automaker announced Thursday that it will invest $13 billion in the U.S. from 2017 to 2022, up from a previous plan of $10 billion. But the automaker continues to import about half of the vehicles it sells in the U.S., potentially exposing the company to steep costs if the administration imposes increased duties. “Regardless of the direction we go, we will never leave the United States,” Toyoda said. “We will stay here.”

    The paragraph above demonstrates, once again, how dumb Trump really is.

    For starters, there is no such thing as a "100% American car, since virtually every car on the planet get parts from a variety of countries, and most car companies sell at least some models that are manufactured abroad. Once example is Buick.

    The company sells three SUV's, the Envision, the Enclave, and the Encore. The Envision is made in China, the Encore is made in Korea, and the Enclave is made in the United States. By imposing tariffs on imported vehicles, Trump is inevitably going to hurt the sales of Buicks, since they will then become more expensive that other competing vehicles.

    http://tohell-andback.blogspot.com/2018/04/when-better-cars-are-build-part-3.html

    In 2006, Buick sales in China surpassed Buick sales in the United States for the first time, and the gap has widened considerably since then.

    For the first nine months of 2009, Buick sold 312,798 cars in China, and only 72,389 in the United States. As a result, when Buick redesigned the Lacrosse for the 2010 model year, the design studio that did the work was in Shanghai, not in America.

    In the same vein, there is no such thing as a "German car" either, since they are made in a variety of countries. Mercedes makes more SUV's here than in Germany, and they also make the Passat in Chattanooga, Tennessee.

    https://www.autoguide.com/auto-news/2014/09/10-german-vehicles-built-germany.html


    Toyota has manufacturing plants in 31 countries, and six of those are in the United States.

    https://en.wikipedia.org/wiki/List_of_Toyota_manufacturing_facilities#United_States

    A few years ago, the car that had the highest percentage of American parts and labor was the Toyota Camry, but the top spot is how held by the Buick Enclave. Chevrolet (remember baseball, apple pie and Chevrolet?) sells numerous different models in the United States, and many of them have less than 14% American content.

    https://www.cheatsheet.com/automobiles/american-made-cars-2016.html/

    In 2010, only 3 of the top 10 selling vehicles had "American" names. Only one of them, the Toyota Corolla, is not made in America. In 2010, the "most American" brand, Chevrolet, had only one vehicle in the top 10 - and it was a truck.

    http://tohell-andback.blogspot.com/2010/10/

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    Dave Volek:

    Trump is also totally unaware how variations in the exchange rate affect sales.

    The current exchange rate between the Canadian dollar and the American dollar means that Canadians cannot afford to spend as much money in America. My wife's sister is a "snowbird" from Minnesota, and the park she stays in over the winter has a LOT of Canadian visitors, but they are fewer in number this year due to the exchange rate.

    https://www.msn.com/en-us/money/currencyconverter/fi-CAD-USD?OCID=ICESEM

    When I sold Nissans in Evanston, Illinois about 10 years ago, the opposite was true. Canadians could save THOUSANDS of dollars by buying new Nissans in America. The disadvantage was that you could not get a factory warranty. However, if you could save $9000 on a new Murano, you could afford to pay for some repairs yourself.

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    Here is the bottom line: free movement of capital and by capital allows for growth in some places and lack of growth in others. The definition of the health of a nation determined by measurement of growth is faulty on its face. There are so many things that play into what we call "the economy" and what should be called the political economy. Furst and foremost we must understand that capitalism's purpose is NOT providing jobs. Providing jobs is a side effect, one that capital attempts to minimize, of capitalism. The reality is that capitalism merely reflects two things, division of labor and a legal system that supports property rights. Anything else is again a side effect for good or ill depending upon your pov. To think that there are not losers when there are winners is simplistic. Capital is not interested in anything other than return/interest/profit which are all claims on future growth. Marx was both right and wrong. Capital doesn't arbitrarily carry the seeds of its own destruction. However since the economy is by nature embedded in society it does carry inherent instability which infects society.

    As for Sir Donald the Orange his word salad regarding "national security" is simplistic and foolish. National security is a myth that politicians grab onto when they have no other ideas. as a small example what does Donnie think will happen should his trade war with the PRC escalate? Who controls the vast majority of rare earth minerals which are critical to electronics that powers virtually everything in our lives?